Desmond set #2.75m price for his Esat Digifone shares

Moriarty Tribunal: Mr Dermot Desmond set a "non-negotiable" price of £2.75 million for the 5 per cent of Esat Digifone which the consortium bought back from him prior to the issuing of the State's second mobile-phone licence in May 1996, the tribunal heard.

Mr Knut Digerud, the former chief executive of Esat Digifone, told Mr Jerry Healy SC, for the tribunal, that in early May 1996 the Department of Transport, Energy and Communications stated that the capital configuration of Esat Digifone would have to reflect what was stated in the consortium's bid for the licence.

The consortium had said the company would be 40 per cent-owned by Mr Denis O'Brien's Communicorp, 40 per cent by the Norwegian company Telenor, and 20 per cent by other investors.

However, in the period between the submission of the bid and the announcement that Esat Digifone had won the competition, Mr Desmond's IIU Ltd was allocated the right to 25 per cent of Esat Digifone. The other two shareholders were to have 37.5 per cent each.

Following the Department's announcement that the shareholding would have to reflect the bid, moves began to get 5 per cent back from IIU Ltd.

Mr Digerud said that Mr Desmond was, at first, reluctant to sell any shares. However, he then came up with a non-negotiable price of £2.75 million. There were no negotiations, and the price was determined by Mr Desmond, he said.

Mr Digerud said there was a general awareness within the consortium that the shareholding configuration was an obstacle to the issuing of the licence.

He said he had no direct knowledge of any meetings between Mr O'Brien and Mr Michael Lowry. However, he was told at some stage that the two men had met in a pub. He could not recall when he was told this but thought it was some time after the event.

He had no memory as to what else he was told about the meeting.

In answer to a question from Mr Healy, he said he had not found it surprising that Mr O'Brien might have met with the minister. "To me Denis O'Brien was a person of the character who had all sorts of contacts," he said.

Asked if he had been involved in licence competitions in other jurisdictions, Mr Digerud said: "Oh yes, and lost many also."

He continues his evidence today.